Report proposes ‘use-it-or-lose-it’ contracts for property developers

Yet another report revealing the crisis of affordable housing supply in Britain is published today, by the indepent, cross-party think tank Civitas.

Unlike most recent reports, however, with the exception of one by SHOUT, the save social housing campaign, this report by Civitas, finds a place for local councils to build new homes to help tackle the country’s housing shortage.

Civitas seeks long-term solutions to socio-economic problems that confound conventional wisdom. So in ‘The Housing Question: Overcoming the Shortage of Homes’, author Daniel Bentley rightly concludes that house-building in Britain has only ever met demand, and kept house prices stable when the public sector has topped-up private output.

Where the Civitas report differs is that it recommends homes built by local councils should be sold into owner-occupation and the cash continually reinvested in a homes for sale pipeline. Bentley argues that public sector investment is needed to bypass private interests and push down prices.

The report claims that initial public investment of £20bn to build 100,000 new homes will counter developers’ tendency to drip-feed properties into the housing market at a rate that supports existing prices.

The ongoing sale of these homes would provide a continuous investment stream for local councils to build more. The report also calls for:

“The introduction of new ‘use-it-or-lose-it’ planning permissions, placing an obligation on developers to build out sites more quickly. This would carry with it the threat that land that is not developed quickly can be compulsorily-purchased by the local authority at half its residential use value.”

Despite a welcome return to public investment in housing, limiting this investment to building homes for sale only, as the report recommends, will not help meet the housing needs of the whole community.

The urgent requirement is for a mix of new homes, including for affordable and social rent, which in turn would bring down the housing benefit bill.

While any addition to the housing stock through public investment is to be welcomed, it is doubtful whether the impact on house prices would be substantial in the short-term. House prices go up quickly but come down slowly.

The report proposes a welcome return to giving local councils a statutory duty to survey local housing needs and to ensure the delivery of new homes to meet those needs in a timely fashion.

The proposal to create a National House-building Fund on which local councils can draw for is innovative. As is access to this Fund for housing associations to build homes for social rent and repay the amount out of future rental income over the years ahead.

But if this works for housing associations why can’t councils build social homes too?

Civitas also recommend that local councils should be given powers to acquire non-planning permissioned land at less than its residential use value when the pipeline of developable local land for housing has run low.

The report recognises that the cost of a public house-building programme, like the one proposed, may appear large in the current fiscal climate, but that this one-off investment should be seen alongside the annual £25bn housing benefit, which, it rightly concludes, is the direct consequence of decades of under-supply of affordable housing.

It doesn’t recognise that the escalating housing benefit bill has been driven by the buy-to-let market, the creation of the so-called affordable rent regime by the Coalition, and the rundown of the social housing sector, which has been accelerated by extending the Right-to-Buy.

The central proposal of the report – a public house-building programme – is a good one. However, such a programme needs to embrace a range of tenures, including much more council house-building.

Kevin Gulliver is Director of Birmingham-based research charity the Human City Institute, former Chair of the Centre for Community Research, and part of the SHOUT save social housing campaign. He writes in a personal capacity.